Policies Meant To Promote Alternative Energies Are Hurting the Middle Class

What's to come?
Oct. 17 2011 11:40 AM

Alms for the Rich

How policies meant to promote alternative energies are actually hurting the middle class.

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The worst part is, members of the middle class are already losing terrifically every time they go to the gas pump. In 2011 Americans will shell out more for gasoline than ever before: in excess of $490 billion. That’s about the size of the entire trade deficit. Worse, the difference in this year’s gas bill versus last year’s is about $100 billion—or roughly the size of the middle-class tax cut the president is trying to pass. Ethanol subsidies are a slow bleed—costing the average person $30 a year—but this year in families in South Dakota spent nearly $450 filling their gas tanks in the month of April alone, an increase of $120 from a year before.

For the past year I’ve been interviewing middle-class Americans about how they’ve dealt with rising prices for the Energy Trap, a project that is trying to understand how Americans cope with gas prices. A survey we did found that the cars of the lower middle class are significantly less efficient than those of the well-off, need more repairs, and are driven farther to work. In interviews, people told me how they made ends meet: taking on an extra job so they could pay just to get to their full time jobs, skipping meals, taking the kids out of sports and private school. Some of their short-term attempts to keep gas in the tank are expensive in the long term: putting gas on a credit card with 19 percent interest, or skipping asthma medication and landing in the ER.


Our whole system of “drive till you qualify” mortgages, expensive credit for used-car purchases, and few transportation options leaves the middle class making hard choices to keep paying for gas without getting a break. Take the example of Warren Buffett and his secretary: Buffett reportedly drives a Cadillac DTS, which the government estimates will use $2,861 in gas this year. It may well be that his supposed secretary drives a 2005 Ford Expedition, which will use $3,674 in gas this year. (“Econoboxes” were once the used car of the struggling worker, but recently, used-car prices have gotten perverse: When gas prices rise, the prices of used SUVs and other less efficient cars drop.) But Buffett, of course, can trade his DTS in for a similarly priced Chevy Volt, , lower his gas bill to as little as $648 a year, and receive a tax credit of $7,500. Meanwhile, his secretary, bless her heart, underwrites Warren’s snazzy commute, hopes her Expedition doesn’t break down, and curses the unfairness of it all. (These stats are from the U.S. government’s fuel economy website.)

Green products and technology need government support. We’ve given so much to high-carbon fuels and infrastructure that they have a built-in advantage, but we can’t afford to depend upon them in the future. If we want to give green energy real political legs, policymakers need to be sure that the middle class gets some of the green goodies that can save money: more efficient vehicles, household solar panels or water heaters, energy-efficiency upgrades. In fact, making sure that there's a middle class market for these goods is part of actually building a strong U.S. green industry—in much the way we built markets for cars, for houses after World War II, and even for home appliances. It’s actually a lot easier to build smart policies than it is to build a killer electric car or a scalable biofuel. But for some reason, we’re not doing it.



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